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Ask Eli: How Much Seller-Paid Closing Costs Can I Negotiate?

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: Is it realistic to expect a seller to pay all of my closing costs?

Answer: Over the last 18 months, Arlington sellers have paid for a buyer’s full closing costs in less than 4% of transactions. In May, I wrote a column explaining that in a standard transaction with a mortgage, buyers are responsible for paying about 2.5-3% of the purchase price in closing costs (reference the article for a breakdown of what is included).

Closing Cost Assistance vs Repair Credits

Seller contributions towards closing costs are often referred to as Seller Credits or Seller Concessions and serve to reduce the amount of cash a buyer needs to put up at settlement. If a seller offers a credit for a broken washing machine, painting or something that comes up during the home inspection, that credit falls into the same bucket of money.

In other words, regardless of whether the money was negotiated under the pretense of closing cost assistance, repairs, updates or a combination of the three, it is all considered a Seller Credit/Concession and deducted as one lump sum against closing costs at settlement.

Lender Limits

In some cases, lenders limit the amount of closing costs a seller can pay for (e.g. investor loans), but most of the time buyers can try to negotiate for the seller to pay up to 100% of those costs and sometimes more than 100%.

You should always ask your lender to confirm how much seller credit you can negotiate because if you negotiate for a 4% seller credit, but are capped at 2%, you may end up losing out on the extra 2% you negotiated for.

The Data

Let’s take a look at how much Seller Credit Arlington buyers have been able to negotiate over the last 18 months. Note that there is no way of knowing whether the credits were offered up-front by the seller as incentive, negotiated during the initial offer negotiations and/or as a result of defects found during the home inspection.

  • On average, buyers negotiate Seller Credits worth .4% of the purchase price or just over $2,000 per transactions
  • 5% of transactions did not include any Seller Credits
  • Buyers negotiated a Seller Credit worth 2.5% or more of the purchase price in just 3.8% of transactions

The higher the purchase price, the less likely buyers are to negotiate a Seller Credit. There is a huge drop-off in average negotiated Seller Credit on homes worth over $500,000.

If you have a limited savings and require the seller to pay some or all of your closing costs in order to comfortably purchase the home you want, it’s important to discuss that early on with your real estate agent and build it into your purchase strategy.

If you don’t create an appropriate strategy around closing cost assistance, you may find yourself wasting a lot of time during the search process and losing out on multiple offers. If you ever want to discuss a purchase strategy, send me an email at [email protected] to schedule some time to talk.

If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

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Ask Eli: Remodeling for Resale vs. Personal Taste

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: I am interested in remodeling my home to better suit my family’s current lifestyle. How much should I consider resale value over our personal preferences?

Answer: I often say that the best way to ensure your home is a good investment is to find one that will suit you for a long time. Market appreciation and local development are never guaranteed, but eliminating one or two real estate transactions from your lifetime is a guaranteed way to generate value.

This is why many homeowners take on major remodeling projects instead of moving to a new home. Major remodeling projects often cost well into the six-figures so homeowners rightly question resale value.

To provide an insider’s opinion, I reached out to Caroline Goree, a Project Leader with BOWA, a local design build firm that specializes in luxury renovations from kitchens to whole-home remodels.

In Caroline’s role, she works almost daily with her clients from the design consultation through construction so she is intimately familiar with the challenges homeowners face when choosing between resale value and personal preference. The following is courtesy of Caroline:

Renovation Expert Advice

As a Project Leader, I am part of the remodeling process from beginning to end and there almost always comes a point during the design phase when clients ask “Will I ever get a return on my investment?”

How often do you buy a new pair of shoes or new tech and consider its return on investment? Taking on a major renovation allows you to stay in your neighborhood, extend the time you live in your home and customize to your lifestyle.

Some of these bonuses won’t show up in a financial model, so it’s important to remember that return on investment can be about more than money (like the one year old iPhone you just replaced with a newer iPhone).

Does Quality Pay?

“Buy well, cry once.” Getting value out of your renovation isn’t just about purchase price and resale potential. Appliances and other systems (HVAC, windows, roofing, etc.) vary greatly in maintenance costs, life expectancy, energy usage and more. Spending more up-front on design consultation and materials often pays off in the long run.

If maximizing resale value is more important than personal preference, talk with your Realtor about the appropriate level of finish for your home that will maximize your return on investment. I typically use appliance packages as an example.

You can purchase a GE Electric Range from Home Depot for under $1,000 or a custom built La Cornue for $25,000. Clients who choose the La Cornue are making a personal choice and should not expect to recoup much of the cost on resale, save the ultra-luxury market. Similarly, choosing a sub-$1,000 range in a $1M+ home is likely to hurt resale value by more than $1,000.

Be Design Specific

In Matthew Frederick’s book “101 Things I Learned in Architecture School” he highlights what I believe is the backbone to a great renovation project, saying “Being nonspecific in an effort to appeal to everyone usually results in reaching no one. Designing in idea-specific ways will not limit the ways in which people use and understand your buildings; it will give them license to bring their own interpretations and idiosyncrasies to them.” Most homeowners and builders are scared of doing something different but, I believe that “the more specific a design idea is, the greater its appeal is likely to be.”

Click here to see an example of a recently completely BOWA kitchen that does not follow the “all white everything” trend that has taken over (dare I blame Chip and Joanna Gains?!), but is absolutely stunning and certain to attract the most discerning buyer… at a premium.

If you and your renovation partner spend the time creating a thoughtful design that is functional and tasteful, there will be other buyers down the road who are equally as passionate about it.

Eli’s Perspective

Caroline, thank you very much for your insight! I’ll add that your decisions don’t have to be 100% for personal enjoyment or 100% for resale, it can be a blended decision.

To help you prioritize, think about how long you’ll live in the home after the renovation. If it’s less than five years, resale should be a higher priority. If you’ll be there for another 12-15+ years, personalize away!

Remodeling.com conducts annual studies on the resale value of popular renovation projects. Their studies found that most projects return 50-80% of their value upon resale. HGTV would have you think otherwise…

If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

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Ask Eli: Why Is My Neighbor Mowing My Lawn?

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: My neighbor is mowing a portion of the lawn I thought was mine, but my neighbor claims it is his. Is this something I can prove through my title work?

Answer: Clients often ask me whether or not they should purchase a property survey, which is optional, when they buy their home. I think that in almost every case it is worth the relatively small investment (usually about $300-$400 for a standard survey).

I was recently chatting with Liz Wasserman of Universal Title, one of a small group of excellent title companies in Northern Virginia (they also serve D.C. and Maryland) and one of the few I recommend to clients, and she shared a story with me about a client who did not order a survey and ended up incorrectly assuming that a section of land was theirs.

Given how frequently I am asked about ordering surveys, I thought it was a good opportunity for Liz to share the story and provide some reasons why it’s a good idea to order a survey when you buy a home.

Take it away Liz…

A new homeowner noticed a neighbor mowing part of her front lawn. When she asked the neighbor why he was mowing her lawn, the neighbor replied the property he was mowing belonged to him, even though the line of trees separating the two houses looked as if the property belonged to the new homeowner. She called her title agent and found out the neighbor was correct. “How can that be? Didn’t you search my property?”

Unfortunately, the new homeowner did not understand the difference between a title search and a survey and failed to purchase a survey. A title search confirms ownership of property, but it does not show the details of the property location.

A survey is a map of real property that shows where the property is located on the earth, the boundary lines of the property, the improvements on the land and access to the property.

FIVE GREAT REASONS TO PURCHASE A SURVEY

  • Undisclosed Rights and Easements: You may own your new home and its surrounding land, but someone else might have a right to use a portion of your property. A survey will show physical evidence of the rights of others to use your property for access, parking, utilities, and other situations.
  • Undiscovered Encroachments: A survey may be the only way to tell if a third party holds a claim to part of your property because their improvements such as a garage, fence, or swimming pool, are on your land.
  • House Built on Incorrect Lot: It may seem impossible, but sometimes a house is built on the wrong lot. A survey provides peace of mind by showing the exact location of the house you are buying.
  • Size of the Property: A survey shows the exact dimensions of the property’s boundary lines and how much land is included within those lines.
  • Adding on in the Future: Many residential platted lots have building restrictions known as setbacks which prohibit building anything within a certain distance from the boundary lines. If you are thinking of adding on in the future, a survey will help you determine if the property is right for both your current and future plans.

Liz, thank you very much for sharing this story and providing some good reasons for ordering a survey. I’d also like to add that you can order a survey at any time if you did not do so when you purchased.

If you are in need of a survey, planning to sell or purchase a home and would like to work with a great title company, or have title questions in general I highly recommend reaching out to Liz and her team of attorneys at Universal Title.

If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

 Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

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Ask Eli: The Amazon Impact — Part 1 of Many

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: What impact has Amazon’s announcement had on Arlington’s real estate market?

Answer: Wouldn’t it be funny if I wrote about something other than Amazon this week? I’ll come back to this topic every 4-8 weeks to provide an analysis on how Amazon’s decision (and probably Apple too) is changing our local real estate market by combining my normal data analysis with experiences of my clients and my colleagues around the D.C. metro area.

Key Data Following the Announcement

On Saturday, November 3 the Washington Post broke news that Amazon HQ2 was in final discussions with Crystal City and by Monday, November 5, the impact on property values was all over the national news.

Late on Monday, November 12, the Walls Street Journal reported the decision was final, and the next day, it was confirmed by Amazon. Let’s take a look at market activity in Arlington over the last two weeks since the news broke:

  • The November 3 WaPo announcement created the biggest surge with investors pouncing and owner-occupants accelerating their timelines. From November 4-12, 100 properties went under contract. Historically, about 200 properties have gone under contract the entire month of November.
  • Since the news became official the night of November 12, 46 more properties went under contract, for a total of nearly 150 properties under contract in a two-week period, surpassing the activity during the same period in previous years by over 50%.
  • I figured a lot of the increased activity would be in the condo market, but the percentage of contracts on condos is in-line with historical trends (about half of all contract activity)
  • While we won’t know how much the market is appreciating until these properties close (when purchase price is released) investors and owner-occupants seem willing to spend more.
    Historically, properties that have gone under contract in November averaged an asking price in the low $600’s and median asking price in low/mid $500’s. Properties under contract in the last two weeks averaged an asking price of $698,000 and median asking price of $625,000.
  • The surge in purchase activity has not been off-set with a surge in new inventory. We’ve had 89 properties listed for sale since the November 3 WaPo announcement, which is barely higher than the same period in prior years.
  • After removing age-restricted housing and the River Place Cooperative, there are less than 350 properties currently for sale and the average asking price of those properties skews abnormally high. The current average asking price is over $995,000 and median asking price is $812,500, compared with an average asking price in the mid $800’s and median price in the mid/upper $600’s historically during this time of year.

My Experience So Far

I knew we were in for a wild ride when buyers I was working with started running into multiple offers and escalations on properties that had been sitting for weeks/months.

Generally, the odds of running into multiple offers after a property has been on the market for a full week are slim, yet every one of the buyers I worked with on an offer in Northern VA over the last two weeks found themselves competing against at least one other very strong offer.

Another investor I’ve been working with ran into 11 competing offers on an old condo in northern Alexandria that normally would have sat on the market for a couple of months.

On the listing side, we’ve had people reaching out about properties that were already under contract and off the market (rarely happened previously). Remember the new 12-unit condo building near Rosslyn I wrote about on October 30? All six of the two-bedroom units are under contract at full price and with the six three-bedroom units almost finished, we expect those to move just as quickly.

From what I’ve gleaned from offers I’ve been part of and activity my colleagues have seen, there’s been an almost overnight increase of 2-5% on most properties in Arlington and northern Alexandria. It doesn’t seem like D.C. or outside the beltway in Northern Virginia is experiencing as notable of a bump, at least not yet.

What I’m Watching For

I am really interested in how the Amazon news fits in with the winter market we usually experience, highlighted by fewer homes listed for sale and slower buying activity.

December historically produces the fewest new properties for sale, by a wide margin, and also tends to offer buyers the best opportunity to negotiate bigger discounts, but I highly doubt this December will offer buyers much in the way of negotiating.

The big question is whether the Amazon news will push a higher number of home owners to sell and buck the low-inventory trend. If new inventory remains low as sellers prepare their homes for the spring market, I wouldn’t be surprised if home owners who make it to market in December/January walk away with significant returns. The pace of new inventory will be key.

I also doubt the purchase momentum will continue at this pace, but will be watching closely with interest. A lot of the activity over the last two weeks was driven by investors, but I suspect many who didn’t get under contract in the first two weeks will hesitate for fear of not getting in early enough (I’ve heard this from a few of my investor clients already).

While many investors will take a step back, I think owner-occupants will continue to be active in the market and willing to pay the new premium, knowing that there is still a much higher ceiling for appreciation over the length of their ownership.

If you are interested in testing the market as a buyer, seller, or investor and want to talk in more detail about your options, feel free to give me a call at 703-539-2529 or email me at [email protected]

If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

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Ask Eli: Department of Veterans Affairs (VA) Loans

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: Are funding fees on VA loans eligible for seller credits?

Answer: Loans guaranteed by the Department of Veterans Affairs are known as VA Loans and provide current and former service members with an opportunity to purchase a home with as little as 0% down.

In addition to the normal closing costs (title fees, transfer taxes, etc.), a funding fee is charged at settlement, which is equal to anywhere from 1.25-3.3% of the loan amount, depending on size of down payment, type of service and whether or not it’s the borrower’s first time using the VA loan program.

It’s a fee paid to the VA on every loan to offset the cost of loans that default (similar to mortgage insurance on non-VA loans). Disabled veterans are eligible to have the entire fee waived.

In a previous column, I explained how buyers can negotiate for seller credits to reduce or eliminate the out-of-pocket expense of closing costs at settlement. Fortunately, the funding fee falls into this category, along with the rest of the standard closing costs associated with a VA loan, and buyers are eligible to have all of these costs covered by the seller.

In theory, if a buyer is able to negotiate 100% of closing costs paid by the seller and chooses a 0% down payment loan, a home can be purchased cash-free.

If you’re unable to negotiate seller credits to cover the funding fee and are concerned about having the cash to pay for closing costs, you’re also allowed to roll the funding fee into your mortgage so that it becomes part of your monthly payment.

Some Other Facts about VA Loans You May Not Know

  • Financing is available up to $1,500,000, just not at 0% down
  • You can use your VA entitlement more than once
  • VA loans are assumable (can transfer from seller to buyer at seller’s rates) which is a big deal in today’s market because rates have been increasing steadily
  • Adjustable Rate Mortgages (ARM’s) are also available, not just fixed-rate

Arlington Veterans Affairs (VA) Loans by the Numbers

  • In 2017, 261 of 3,130 buyers (8.3%) used a VA loan. By comparison, 2,173 used a Conventional loan (69.4%)
  • The average purchase price for homes purchased using a VA loan was just over $615,751
  • 38% of VA loans were used to purchase a condo, 29% to purchase a townhouse and 33% to purchase a single-family home
  • On average, buyers using a VA loan negotiated 2.3% off the original asking price. By comparison, buyers using a conventional loan negotiated 2.2% off the original asking price and cash buyers negotiated 4% off the original asking price

I hope the veterans and active duty military readers had a great Veterans Day Weekend. Thank you for your service!

If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

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Ask Eli: Can I Use a Gift from My Parents for My Down Payment?

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: Am I allowed to use a gift for the down payment on a home purchase? If so, are there any restrictions I should be aware of?

Answer: How else do you think many first-time homebuyers (second and third timers too) are able to afford the steep cost of real estate in Northern Virginia and D.C.?

Sometimes the gifts are just that, gifts from generous family members who want to help a loved one or child purchase a home, but many “donors” consider these contributions to be a way to invest in the local market.

The good news is that it’s easy for family members to help each other out with down payments and closing costs. I reached out to one of the area’s top lenders, Jake Ryon of First Home Mortgage (can be reached via email at [email protected]), to provide some general guidelines on gifts:

  1. There is no limit to the total gifts funds you can receive or how many gifts you can receive from multiple eligible sources.
  2. The gift must come from an eligible source. For most loan products, that means a relative or spouse. The donor cannot be an interested party (seller/developer/realtor/lender/title attorney) to the transaction.
  3. For Conventional or VA loans, we just need to show the borrower has received the gift funds. FHA requires “donor-ability”, meaning we need to look at the donor’s bank statements.
  4. For best practices, we typically recommend the donor wire the gift funds directly to the title company so there aren’t delays waiting for a check to clear.

Oftentimes a lender will require a signed letter from the gift donor stating the purpose of the funds and there may be a need to establish the source of the gift, but those details are circumstantial and it’s best to notify your lender up-front of any gifts you will receive so that they can advise you on the proper steps.

I have noticed a sharp increase in the number of buyers I’m meeting whose parents are gifting down payments in order to help their children purchase a home before Amazon (likely) announces its move into Crystal City/D.C. Metro.

For those of you who don’t have the luxury of financial assistance helping you get to 20-25% down, there are plenty of great loan programs available that allow you to put 3-10% down and make home ownership much more accessible.

If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

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Ask Eli: New 12-Unit Condo Building Near Rosslyn

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: You recently offered off-market condos near Rosslyn in your Off-Market Source post. Do you have any additional information about the building and other units that are available?

Answer:

Full Disclosure

Before I jump into the details, I want to disclose that my team and I have a direct role in the sales of Pierce Court (1245 N. Pierce Street), unlike previous condo buildings (Key & Nash, Trafalgar Flats) that I have written about. Now back to your regularly scheduled program…

The Basics

I’ve noted in the past that Arlington is starved for new condos, averaging less than one new condo building per year since 2010, but beyond that, Pierce Court will be one of only a few buildings with less than 20 units (12 total units). It has six 2 BR/2 BA units on the first two floors and six 3 BR/2 BA units on the top three floors.

All units have high-end finishes (gas cooking!), upgraded sound-proofing, parking and a lot of private outdoor space, including some units with multiple balconies and/or large terraces (the model unit alone has 596 square feet of combined outdoor space). The penthouse units each have private rooftop terraces with ~500 sq. ft. and wide open views.

These smaller boutique 2 BR-3 BR buildings are wildly popular in D.C. (zoning plays a big role in their prevalence) and I think it will play well in Arlington for buyers who don’t want to live in a high-rise or pay high monthly fees for amenities they don’t value.

What I’m Most Interested In

I have no doubt buyers will love the floor plans, finishes and outdoor space delivered by the builder, The Asset Companies, but what interests me the most about this project is how it will do in an underdeveloped, yet highly desirable, neighborhood.

Most locals will know it as being “around the corner from Quarterdeck,” it’s more easily described as being across Route 50 from Rosslyn/Courthouse and the County calls it Radnor/Fort Myer Heights. It’s a half mile walk to the Rosslyn or Courthouse Metro and the Iwo Jima Memorial, one mile to Whole Foods/Clarendon and truly a quiet, residential neighborhood (was a favorite of mine for dog walks when I lived in Rosslyn).

One would think that every neighborhood this close to Rosslyn-Clarendon would be developed and expensive (Lyon Village/Park), but Pierce Court sits in the middle of a 2-3 block radius of underdeveloped properties and will garner a lot of industry attention to gauge future condo and townhouse development.

There is precedent for $1M-$2M+ sales here, but for properties a few blocks east, with unobstructed views of D.C., like Monument Place townhouses (in my opinion, the most undervalued properties in the D.C. area) and condo buildings like Prospect House, Memorial Overlook and The Westlie.

I think the builder did a great job setting prices that will attract buyers to an area they aren’t used to seeing modern condos, which I will detail next…

On-Paper vs In-Person

The 2 BR/2 BA units range from $485k-$575k with monthly fees under $350 and the 3 BR/2 BA units range from $815k-$995k with monthly fees under $530. All units include parking and the fees cover all utilities except for TV and internet. For details on floor plans, pricing, availability and more you can visit the Pierce Court website.

When I initially reviewed the project on-paper, the square footage jumped out at me. With the 2 BR’s at 702 sq. ft.-870 sq. ft. and 3 BR’s at 1127 sq.ft.-1261 sq. ft., I was concerned about how buyers would receive that amount of space — would it be enough?

Once I had a chance to see the units in-person I was sincerely impressed with the layouts and how the space was used. The way it’s designed for functional space feels like there’s an extra 20-25% more square feet in each unit.

When you add in the large, usable outdoor space and low condo fee, I think the builder is delivering incredible value to the market and this building will stimulate more development in the neighborhood.

Say Hello at the Launch Party or Private Tour

We are hosting a public launch party at Pierce Court (1245 N. Pierce Street) on Thursday, November 8 from 3-7 p.m. I’ll be there the entire time and would love a chance to meet readers! We’ll have light snacks, beer and wine for you to either celebrate or drown away the results of the mid-terms! Please RSVP online if you think you’ll make it.

If you can’t make it to the launch party, the model unit (unit #1, a 2 BR with huge private terrace) and on-site sales office opened on Sunday and will keep regular hours Tuesday through Sunday.

You can also schedule a private tour online or directly with me by emailing me at [email protected]. I’m happy to share my personal thoughts on which units I think will sell the fastest and offer the best value, just shoot me an email and we can meet or find time for a call.

If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

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Ask Eli: Find Savings In Your 2019 Condo/HOA Budget

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: I’m the Treasurer for my condo association and we’re working on the 2019 budget. What’s a good way for us to save money in the budget without compromising the health and maintenance of the building?

Answer: As a former Condo Board Treasurer, I feel the pain that this time of year brings, so I’m happy to offer some advice that helped me finding savings while I oversaw the budget and has helped other associations do the same… review your master insurance policy.

I know, it’s not the most exciting answer, but your insurance policy is likely a top three expense on your balance sheet every year and if you haven’t reviewed it lately, there’s a good chance you can cut the cost by 5% or more and probably improve your coverage at the same time.

I’m not an expert in insurance so, I asked Andrew Schlaffer, Vice President at USI Insurance Service’s Community Association Practice to provide some details on what Board’s should look for when they do a review of their Master Policy. If you’d like to discuss a review with Andrew directly, you can reach him at 703-205-8764 or [email protected].

Take it away Andrew…

Pillars Of Insurance Reviews

Condo insurance reviews require a holistic approach, so it’s important to break the cost into a few distinct categories: insurance premium, deductible expense and out-of-pocket costs. To effectively accomplish long-term savings, all three of these categories need to be considered and addressed with a qualified insurance professional.

Adjust Coverage Responsibly To Save On Premium

Premium is certainly a factor to consider during the insurance selection process; however, available insurance products differ significantly.

Coverages and services should be very carefully analyzed and compared. While omitting various coverages will save premium dollars, it might also result in substantially increased costs to the association for out-of-pocket expenses related to uncovered claims.

It is critical to work with a professional who understands local insurance needs and can adjust your insurance program in a way that maximizes premium savings while maintaining adequate insurance coverage. Some coverages may be required by statute and/or association documents, so cutting required coverage exposes the Board to unwanted risk.

Deductibles Based On Loss History

Associations with strong financials often choose to increase their property deductibles which can provide immediate savings of 2-5%. Deductibles range from $2,500 to $25,000+.

When considering deductibles, it is important for the association to review their loss history and the loss history of comparable buildings in an effort to obtain an accurate estimate for deductible expenses.

Rate Shopping

The most common strategy employed by associations seeking lower insurance costs is to shop their carrier.

An association can accomplish this in several ways but generally their appointed broker can offer alternative carriers in an effort to obtain the most competitive rates possible. Make sure your broker has access to all of the competitive markets in order to maximize the likelihood of finding savings.

Secondly, and more importantly, if savings is found, your broker should verify that all required coverages are included to secure the association’s long-term financial security and lender approval. Additional savings can be realized by a thorough coverage analysis to verify the association is not being over-insured by paying for coverage it won’t use.

We are in a relatively soft insurance market, so an association can expect savings of 2-5% from a simple review, depending on the number of claims that have occurred during the previous policy period.

To insure cost savings and long-term health of your property, make sure your insurance broker specializes in condominium or homeowners associations. To maximize your savings, the association, insurance broker and insurance carrier need to work in harmony in an effort to identify and reduce threats to the financial health of the community.

Help Reducing Claims

One of the best ways to keep insurance costs down is to avoid claims altogether.

Some examples of how insurance brokers can help reduce claims and the impact claims have on your future premium costs include coverage reviews/benchmarking, claims management services, site inspections, building upgrade recommendations, life safety planning, vendor contract reviews, discrimination/harassment training and hiring/firing best practices.

Thank You

Andrew, thank you very much for providing your insight. I know from experience how much of an impact an insurance review can have on a condo budget, but also how important the right coverage can be when there’s an unexpected claim.

One thing board’s often overlook when they’re solely focused on price is the quality and speed of service when a claim in filed. For example, if a pipe bursts and floods the gym and lobby, a board should be confident that the work orders will be executed quickly so the building can be back on its feet without delay or headache.

Unfortunately, most boards don’t think about this until they’re dealing with it, and it’s too late. I encourage any board/treasurer to reach out to Andrew to review their policy. He does fantastic work and USI is a leader in condo/HOA insurance policies in Northern Virginia. His contact info is:

Andrew Schlaffer, Vice President
USI Community Association Practice
www.usi.com
Direct: 703-205-8764
Email: [email protected]

If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

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Ask Eli: Investing Along Columbia Pike — Trafalgar Flats Update

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: How much interest has there been in Trafalgar Flats and do you think it’s a good investment?

Answer: Twelve months ago I introduced a new condo building off of Columbia Pike, Trafalgar Flats, by Pillars Development Group. Now that they’re near completion, I stopped by to take a look at the progress and talk to Rick Snider, Pillars’ VP of Planning & Design.

Impressive Design, Upgraded Finishes

Trafalgar Flats owners will be pleasantly surprised with the quality of the finishes; everything is upgraded well beyond what one expects at this price point.

It’s a modern design without being over-the-top and includes nice touches, like heavier interior doors, most builders skip. Instead of using standard bucket-style recessed lighting, they chose LED lights that lay flat against the ceiling (pictured below) for a minimalist look I expect will become a trend.

Strong Pre-Sales

Selling condos without a model isn’t easy so having 40% sold (33 of 78 units) already reinforces how starved Arlington is for new condos at a reasonable price (about half the cost of comparable units at Key & Nash).

To Pillars’ credit, their sales have been evenly distributed across each of the three types of units – Jr 1BR ($265k+), 1BR ($340k+), and 2BR/2BA ($475k+). I was particularly interested in how the Jr 1BR would sell because it’s a product that we don’t see much of around here; it turns out they made the right decision.

Trafalgar Flats will be complete, with a model unit, by the end of the year. Although that comes at the slowest time of the year for local real estate I expect the pace of sales to move quickly. I wouldn’t be surprised if they are sold out by March 2019, sooner if Amazon HQ2 announces their move to Arlington.

Investing Along Columbia Pike

Western Columbia Pike has a higher appreciation ceiling over the next 5-10 years than most Northern VA neighborhoods. It is primed for a shift in residential and commercial activity as the County’s Multimodal Street Improvement project reaches completion over the next few years, including improvements to underground utilities.

Just this year, major projects along western Columbia Pike have been announced or under construction including Trafalgar Flats, a new Pillars townhouse community, Centro Arlington (anchored by Harris Teeter), and Gilliam Place Apartments.

Thoughts From Pillars Development Executive

I spoke with Rick Snider, long-time Northern Virginia real estate Executive and VP of Planning & Design for Pillars, about Trafalgar Flats and his thoughts on development along Columbia Pike:

How did you choose this area over others to build TF? We were immediately attracted to this site when it came onto the market due to the ‘hole’ in the market relative to “For Sale” product versus “Rental”; we rightly anticipated that some nearby apartment renters would want to become new home owners, rather than purchase an older condo.

Are there other pockets of Northern Virginia or Arlington that you believe has similar appreciation potential? We like Columbia Pike and the market along it; we already have townhouse lots in planning nearby Trafalgar Flats to emphasize our interest in and commitment to this area, and are hopeful that our searches for additional land development opportunities in the area will be rewarded.

Where do you see Columbia Pike Development in three years and in seven years? When do you expect the biggest transition to take place along the Pike? The foundational change of course is found in the Multimodal Project which underscores Arlington County’s commitment to upgrade the infrastructure along this important corridor and to thereby not only improve existing residents’ quality of life, but also to attract additional developments like Trafalgar Flats, Centro Arlington and Gilliam Place.

Do you think Columbia Pike or Lee Highway will re-develop faster?  If you had asked me this a couple of years ago, I would have weighed in on Lee Highway without hesitation, but I think that with the new developments underway and with the infrastructure improvements going in now and in the future that it becomes much more of a horse race; and I think that the price of housing, both for sale and rental, may well be the deciding factor that pushes the Pike ahead.

If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

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Ask Eli: The Best Month to Find a Good Deal is Coming Up

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: We are ready to buy a home, but not in a rush to do so we are wondering what the best time of year to buy a home is. Does it make more sense to buy now or should wait until the spring?

Answer: The right time of year to buy depends on the type of buyer you are and your priorities. The number of new properties listed for sale drops significantly in the fall and winter, so you may struggle to find the perfect home. However, demand drops too so properties spend longer on market and you have a better chance of negotiating a lower purchase price.

Buy in the fall/winter if…

  • You are searching for a bargain
  • The right home is just outside of your budget
  • You have seen multiple homes for sale that you like
  • You can’t bring yourself to offer full asking price

Wait until the spring/summer if…

  • Your criteria are hard to match
  • You are willing to pay top dollar for the perfect home
  • You have to sell a home in order to qualify to buy your next home
  • You don’t mind losing out to another offer

Let’s take a look at the data that supports the above statements. Here are some highlights of the chart and table shown below:

  • December has by far the fewest number of newly listed homes for sale, followed by November and January
  • Buyers who have offers accepted in December are able to negotiate the biggest discount from the asking price, but July-January also offer more favorable negotiating conditions for buyers
  • If you’re looking to avoid competition, November-January have significantly less contract activity than the rest of the year
  • If you like to take your time with decisions, the market moves notably slower July-January
  • The single-family/townhouse market is influenced much more by seasonality than the condo market

Chart #1: The chart below shows the number of newly listed homes for sale in Arlington each month, going back the last three years.

Table #1: The table below is made up of Arlington home sales from 2015-2017, excluding new construction and anything that took more than 120 days to sell. I have highlighted the cells in green that are the most favorable for buyers. The table is based on the month that a sold home went under contract, not the month it actually sold (homes usually sell 30-60 days after they go under contract).

If you are considering buying a home and would like to discuss how you might be able to take advantage of a softer fall/winter market, feel free to reach out to me to schedule a time to meet. You can reach me by email at [email protected] or by phone at 703-539-2529.

If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

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Ask Eli: “Ask” Us About Tysons, McLean, Vienna and Falls Church!

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

I am excited to announce that today marks our expansion of the “Ask Eli” real estate column further into Northern Virginia, with the introduction of “Ask Val” in the Tysons Reporter.

What Is Tysons Reporter?

Tysons Reporter is a new online local news publication brought to you by Scott and his team, who started and still oversee, ARLnow. It will cover local news in Tysons, McLean and Vienna (and probably Falls Church) the same way they canvass Arlington for great, hyper-local stories. If you work, live, have an interest in those communities or know anybody that does, I encourage you to follow along or sign-up for their daily newsletter.

Who Is Ask Val?

Val is one of the awesome agents in the Eli Residential Group and specializes in the neighborhoods surrounding Tysons (with a ton of experience in Maryland too!). She grew up in Peru and began her real estate career in the DMV in 2004.

Starting today, she will be writing a weekly Ask Val real estate column for Tysons Reporter. She will include some of the data-driven content that you’re used to seeing here, but plans to give the column her own twist by using videos and some fun local flavor to bring her own personality to readers.

I hope you find some time to follow along with Val’s column and the rest of the great local news at Tysons Reporter!

If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

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Ask Eli: Amazon HQ2, My Opinions and its Impact on Housing (Part 2 of 2)

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Last week, I published Part 1 of my opinions on why Amazon HQ2 is likely to come to the Northern Virginia/Washington, D.C. region and this week I am adding my thoughts on where I think they will/should locate and (sort of) answering the most common question I get — how it will impact the housing market.

Amazon Shouldn’t Pick One Location

The popular choice for Amazon’s second headquarters in Northern Virginia seems to be Crystal City for a number of reasons including immediately available office space, proximity to National Airport (DCA) and Government, Metro access, a well-educated population and more. While I do agree that Crystal City is the best primary location for HQ2, I hope they take advantage of the entire Northern Virginia — Washington, D.C. — Maryland region to prevent overloading the infrastructure (specifically schools and traffic) and housing market in a single jurisdiction.

According to the RFP, Amazon spreads 8.1M square feet of office space across 33 buildings in Seattle, so I would expect a similar make-up for HQ2 (projecting 8M square feet of office space).

Amazon can distribute these offices from Arlington County to Loudon County in Virginia, K St. to Congress Heights in Washington, D.C. and Montgomery/Prince George’s County to Baltimore in Maryland. They can also benefit from Metro/Commuter Train connectivity between every site, frequent domestic and international flights within 30 minutes, shipping ports, data centers, a diverse and educated workforce, affordable and diverse housing options and almost everything else that they mention in their Key Preferences and Decision Drivers.

Based on conversations, news articles and personal opinion the following locations are where I think Amazon should spread its 8M sq. ft. of office space for HQ2. I highlighted the locations I think should have the largest concentration of Amazon jobs.

Northern Virginia

  • Crystal City/Rosslyn-Ballston (majority presence)
  • Tysons
  • Reston
  • Loudon One
  • Richmond Highway (Alexandria)

Washington, D.C.

  • K Street/Foggy Bottom
  • D.C. Armory/RFK Stadium
  • Anacostia/Congress Heights

Maryland

  • College Park/Greenbelt
  • Bethesda/Rockville
  • Baltimore (City)

All of this can be done to strategically improve local economies and infrastructure without the devastating effects of adding 50,000 jobs to one or two locations. Plus, Amazon already has enticing incentive packages from all of them!

The Impact to the Housing Market Will Be…

Everybody wants to know how much home values will rise and how quickly… and it would be irresponsible of me to answer that question. Until we know how the jobs will be distributed, how they’ll hire (local vs. new residents), the timeline and the types of jobs then there is no basis for quantitative analysis. However, I’ll share some thoughts that may help answer some of your questions…

If the announcement is made in favor of Northern Virginia or the D.C. Metro, I believe we will witness two opposing market forces at play:

On one side, prices will push upward as sellers demand a premium for being part of the new Amazon market area and buyers are eager to purchase before the wave of Amazon employees. In direct opposition to price appreciation will be a significant increase in homes for sale because many home owners are waiting for a decision before putting their house on the market. If you plan to buy or sell in the wake of Amazon’s decision, you’ll want a pre-decision strategy and access to daily analytics after the decision.

This is where I’ll happily plug myself and my team. If you’re a weekly reader of my columns, you’ll know this is what we do best. If you’re new to my columns because of the click-power of an Amazon HQ2 article, here are two recent examples (one and two) of custom, hyper-local data analysis. Personalized analytics is a pillar of our service offerings.

Ultimately, I think price appreciation will win out because the market is already hungry for more supply, but the appreciation will be limited until the demand curve shifts when Amazon’s employees, and the employees of companies that support Amazon, start buying and renting.

To get a sense of what could happen to the housing market over time, let’s take a look at the Seattle area since Amazon started taking off in 2012. Remember, with a company like Amazon, it’s not just their employees but the employees of companies with direct and indirect business relationships.

Median Home Prices Have Doubles Since Jan 2012


Courtesy of Zillow

Amazon Stock Growth Since Jan 2012


Courtesy of Yahoo

Conclusion

As a homeowner and real estate agent, I am excited and hopeful for Amazon to select our region as the location of their second headquarters. As an Arlington resident frustrated by congestion and concerned about the impact rapid housing price appreciation will have on our community, as well as a father of a future Arlington Public Schools student, I hope that Amazon makes a conscious decision to spread their wealth across the entire Northern VA-Washington D.C.-Maryland region. We will have our answer within 100 days.

P.S. — Jeff, I’d be happy to assist your employees with their relocation. My cell phone number is 703-539-2529 if you’d like to discuss privately 🙂

If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

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Ask Eli: Part 1 of 2 — Amazon HQ2, My Opinions and its Impact on Housing

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: What would the impact of Amazon HQ2 be on housing in the D.C. Metro, Northern Virginia and Arlington?

Answer: Welp, here we go… On the heels of Jeff Bezos’ trip to D.C., where he confirmed an Amazon HQ2 announcement would be made by the end of the year, I figured there’s no better time to get maximum internet clicks on an Amazon article!

In all seriousness, this is a topic I think and talk about almost daily (jealous?) so I wanted to share my thoughts with you, with a focus on ideas you may not have read in other forums or articles (e.g. Bezos buying a house in D.C. is not mentioned beyond this point).

I’m Confident Amazon HQ2 is Coming to Northern VA/D.C. Metro

Criteria: I won’t bore you with a breakdown of Amazon’s RFP criteria, but the Amazon RFP is a quick read and it’s clear this region meets and exceeds their priorities and everything on their list of “Key Preferences and Decision Drivers.” 

Tech’s Shifting Role: It seems that the long-term success of tech giants will depend on their ability to lobby and direct favorable public policy just as much as it will depend on their ability to develop innovative products. I believe that Amazon HQ2 is only the beginning of a massive tech migration to the D.C. region (see recent Facebook and Apple news).

Bezos v Trump: Don’t you think that with every Trump tweet or comment about Bezos/Amazon/WaPo, the decision becomes more and more personal for Bezos? Can you think of a more tempting power-play by Bezos than moving in next door? I have no doubt that Bezos knows where he can put an Amazon building with a direct line-of-sight from the White House.

My Network: Did I mention I talk about Amazon HQ2 almost every day?

That has led me to some interesting conversations with folks in my network including recruiters for Amazon, employees and former employees of Amazon and other tech companies, local corporate relocation insiders, home inspectors and general contractors. Each offering their own industry-specific signs of a decision in favor of our region.

Vegas: There is nobody better at predicting the future than Las Vegas bookmakers so when Bovada.lv, the largest online gambling site in the US, came out with odds heavily favoring Northern Virginia (#1) and Washington, D.C. (#2), I knew the hype wasn’t just local.

Available Office Space: Amazon is projecting a need for 8M square feet of office space to house 50,000 employees. According to John Redeker, a Senior Associate for Cushman & Wakefield, the Rosslyn-Ballston Corridor alone currently has 5,375,000 sq. ft. of available (“available” sounds better than “vacant” right?) office space and Crystal/Pentagon City is sitting on over 2,177,000 sq. ft. of available office space.

Hmmm… sounds a little too perfect, doesn’t it?

Oh, and don’t forget that Tysons has over 1,564,000 sq. ft. of brand-new office space under construction.

By the way, if you’re a business-owner and planning on moving or adding office space in the next year, you may want to reach out to John now while rents are still on the downward trend.

In next week’s Part 2 column, I will detail where I think Amazon should locate its 50,000 employees across 8M square feet of office space and what that will mean for the housing market in the near-term and long-term.

P.S. — Jeff, I’d be happy to assist your employees with their relocation. My cell phone number is 703-539-2529 if you’d like to discuss privately 🙂

If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington D.C., and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

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Ask Eli: Buying Your Rental/Selling to Your Tenant

Question: I am interested in purchasing the condo I currently rent and my landlord is interested in selling, but that’s as far as we’ve gotten. Do we need an agent for the transaction? Is there anything unique about this type of transaction we should be aware of?

Answer: The sale of a rental property to a tenant is usually a dream scenario for both parties, each realizing financial benefits and simplifying an often-difficult process. The transaction reflects a normal sale except that the buyer and seller have a direct relationship which usually is not the case. Thus the question — should you use an agent?

I’m going to take a wild guess and assume most of you reading this are thinking “No way! If you don’t need somebody to open a door, you don’t need an agent.”

Yes, part of an agent’s role in a sale between tenant and landlord is not necessary — the buyer doesn’t need help defining criteria or accessing properties and the seller doesn’t need help preparing the property for market and marketing it. Yes, two parties can enter into a contract to sell property without an agent and just hire a title attorney to handle the legal transfer.

However, I would encourage you to consider some questions/scenarios when you’re deciding whether or not to use an agent for the direct sale of a rental to a tenant:

Market Value

This is the most obvious and common request for an agent to be involved in a direct rental sale. Are both parties comfortable discussing what they believe fair market value is and negotiating the right price? Some people are perfectly comfortable with these conversations, while others would rather it be handled by a 3rd party.

Contract & Transactional Support

Our contracts are the result of decades of transaction history. They exist to provide protections to both buyer and seller and define rules in the event something doesn’t go as planned. You should consider whether or not you want the services of a professional to set-up the contracts in a way that protects your interests.

Think of this as an insurance policy on the transaction — if everything goes perfectly, a simple contract works just fine, but as soon as something (or somebody) derails, you want the right contract language in place and somebody to advise on best practices.

Representation

In Virginia, you have the option of each party being individually represented, whereby the agent has fiduciary responsibility to represent the sole interests of the party they work for or an agent can act as a Dual Representative, whereby the agent acts more like an unbiased facilitator/mediator of the transaction.

It is also worth noting that while one party may seek representation, the other party may choose to be unrepresented.

Commission/Payment

In a traditional home sale, the seller pays the commission of their agent and the agent who represents the buyer. However, in a direct rental sale, it’s my opinion that this is much more negotiable and ultimately gets built into the structure of the deal.

For example, if the seller chooses to be unrepresented and the buyer chooses to hire an agent, the buyer should bear the cost of said representation directly or within the terms of the deal.

It is also worth noting that, like any professional service, the cost of the representation is negotiated between the hiring party/parties and the agent.

Rental Agreement

Landlords and tenants should review the terms of the agreements they signed, if applicable, with the agent they used when they rented the subject property.

There are terms in many agreements that require a commission payment to the previous agent/broker if the property is sold during the tenancy. If you’ve already agreed to pay a commission in the event of a sale, you might as well utilize their services in the deal as well.

There is not one set answer to whether you should use an agent for your direct rental sale, but it’s important for both parties to understand their options for representation and what they are giving up or gaining by their decision. A direct sale changes the role an agent plays in a transaction, but it doesn’t eliminate it. In many cases, the negotiation and contract-to-close services are the most important role an agent will play.

If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, (202) 518-8781.

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Ask Eli: GreatSchools.org Changes Ratings… Again

This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!

Question: Do you know why GreatSchools.org changed the ratings for Arlington’s schools?

Answer: Sometime this summer, the popular school rating website GreatSchools.org changed their rating for most of the schools in Northern Virginia. If this sounds familiar, it’s because they made sweeping changes to their grading system less than a year ago, which I wrote about in March.

The previous changes resulted in a drop of 1-2 points for nearly every school in Northern Virginia, leaving Arlington with high schools rated 5, 4 and 3. The latest adjustments seem to have increased the rating for most schools, but some schools got dinged again like Jefferson Middle. After the latest changes, Arlington’s high schools are rated 8, 6 and 4.

School Ratings Influence Home Prices

If you’re wondering why I’m talking about school ratings in a real estate column it’s because the ratings issued by GreatSchools.org heavily influence where people buy and how much they’re willing to spend. You can debate the merits of these ratings systems all you want, but the fact is that they play a significant role in real estate.

While Niche.com generates the most traffic, I find that GreatSchools.org is much more popular locally and I think it’s due to the fact that they grade harder than Niche (Niche gives out a ton of A-, A, and A+ ratings).

What Changed?

I reached out to GreatSchools.org for details on why so many ratings were changed and was told something along the lines of “GreatSchools is always improving our rating systems to make sure it is as accurate as possible.”

Through various threads and Googling I did earlier this year, it sounded like the changes earlier this year were due to a new score for how well schools help under-performing students improve year-to-year.

I haven’t been able to find any information on why scores changed so dramatically this time around. If any of the readers have insight into the scoring adjustments, I would love to hear from you in the comments section or by email.

Tracking the Changes

GreatSchools would not provide me with historical ratings, so in March I compared scores I had recorded for clients in Fall ’17 to the new scores in March ’18.

Now that we have another round of changes, I added a column to that table so we can continue tracking past and current scoring trends.

Unfortunately, when I built the table in March I didn’t have any recorded scores for elementary schools and limited middle and high schools in Fairfax County.

Good News/Bad News

The good news is that the most recent adjustments helped almost all of Arlington’s schools, especially the high schools.

The bad news is that it hurts the credibility of GreatSchools.org and other rating systems because it makes it hard to rely on their ratings when you have a school like Yorktown HS go from a 7 to a 5 to an 8 in under a year.

Ultimately, consumers need to decide for themselves how much they rely on these scores to influence their decisions, but nothing beats talking to neighbors, joining online forums and calling or visiting a school.

If you’d like a question answered in my weekly column, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

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